You might think that Russia and Ukraine are miles away from our country and we probably won’t be affected anyway. However, the invasion has already made an impact on the Philippines, and here’s how.
Russian forces reportedly launched a military operation in Ukraine on Thursday. With the recent event, an economist told CNN that Filipinos are also affected. “The main concern right now will be where inflation would be headed locally,” Security Bank AVP and chief economist Robert Dan Roces said.
Saint Basil’s Cathedral in Russia | Photo from Pexels
Investopedia defines “inflation” as the decline of purchasing power of a given currency over time. “Purchasing power”, on the other hand, is the value of a currency or the number of goods/services that one unit of money can buy.
Simply put, we should brace for price increases, as Presidential Adviser for Entrepreneurship Joey Concepcion said during the Laging Handa briefing on Friday. Concepcion also reportedly said that the increase in the price of crude to over $100 per barrel will cause commodities prices to increase.
Meanwhile, Roces talked about the increase of costs of many agricultural commodities imported by the Philippines, like wheat and soybean. He emphasized, “All these could likely transmit into local prices with the cost being transferred towards local consumers.”
Photo from Rice Pinas (@ricepinas )
Despite the situation being currently confined regionally, he says that its effect on the Philippines could however become more massive if the situation gets worse. He explained “The situation right now remains very fluid and we can only hope that it doesn’t get any worse. But if it does, I think our authorities, especially our economic managers, remain steadfast in terms of preparing for the worst outcome in terms of pricing.”
The chief economist also explained how this may be a difficult situation for the country as we are only starting to recover from the COVID-19 pandemic.
“What the government can do now is to aid this recovery further through monetary and fiscal support–some subsidies in terms of fuel price subsidies, something that they did with much success last year, which actually tamed the inflationary tendencies,” Roces stated. “What we have to do at the moment is to watch out for that pass-through effect coming from the conflict. So mostly, it has something to do with price shocks as well. Our inflation can only serve to slow down economic growth, so I think that’s where the support should come from.”
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